• Ethereum completed its shift to a more energy-efficient system for powering its network in 2022.
• This upgrade, known as the Merge, marked a massive reduction to the network’s energy footprint.
• However, the Merge has led to charges that Ethereum is becoming too centralized, and has not spurred a long-hoped-for bump to the price of ether.
In 2022, Ethereum made great strides towards becoming a global computer and decentralized financial system. The Merge, the blockchain’s massive upgrade to a more energy-efficient system for processing transactions, marked a key moment in the network’s development. This switch from proof-of-work to proof-of-stake was estimated to have cut the network’s energy consumption by around 99%.
However, the Merge also caused some controversy. Critics argued that the new system, which requires validators to “stake” ether (ETH) with the chain for the chance to write transactions to its ledger, is becoming too centralized. Furthermore, the Merge has not resulted in the long-hoped-for bump to the price of ether (ETH), which has declined more than 20% since the event.
Ethereum’s year was also marked with other major problems. Growing concerns around censorship have surfaced, as well as the emergence of record-shattering hacks on Ethereum-linked infrastructure. This has raised questions about the security of the blockchain and dampened investor confidence.
In spite of these setbacks, Ethereum continued to make progress in other areas. The blockchain’s development community has been hard at work on scaling solutions that will allow it to process more transactions, as well as new tools for making decentralized finance easier to use.
All in all, Ethereum had a rollercoaster year in 2022. The Merge was a milestone achievement, but the blockchain still faces many challenges as it works towards becoming a global computer and decentralized financial system. As the blockchain continues to evolve, investors and developers alike will be watching closely to see what the future holds.